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The Importance Of Business Ethics

21/06/2011

By Katrina Polder
Business ethics concerns itself with the choices exercised by the people in organizations in terms of decisions and actions. Some choices are considered to be good and some are not. But there are no standard definitions. A lot of the choice depends on the perspective of what is good for the business and from whose point of view.
One common earlier point of view is that what is good for the owners or for the shareholders is good for the business. All economically profitable actions and decisions are considered to be good in this perspective. All organizational behavior of the individuals and groups is oriented in such perspective towards profit generation with a single minded focus.
The danger with such a view or behavior is that sometimes it can be damaging others who are not shareholders, but who are affected by such behavior and decisions. Laws which govern such business behavior and choices deal with legally right and wrong aspects; they do not and cannot deal with morally right or wrong choices, so long as they are not legally wrong.
And this can lead to ‘clever’ legally defendable, but otherwise damaging choices in business, damaging to customers, to society, to government and to stakeholders other than only the shareholders. An emerging point of view which is slowly gaining wider acceptance is that the greater good of all the stakeholders needs to be considered and organizational choices have to be made in line with such considerations, if the business has to be considered as operating with business ethics.
Social responsibility of business, not just responsibility to the shareholders, is the basis of this school of thought. This is necessary not from the point of view of a ‘good boy’ like business only; it is also necessary to build an acceptable image of the business in the eyes of the society and consumers, and thereby for its products to sell well. It makes business sense too to take such decisions which are right in this perspective and to spend for them.
The fostering of such business ethics comes through various actions and cultural aspects: the kind of people a business recruits, the formal and informal principles and practices encouraged by the managers, the systems of awards and rewards for different types of behaviors, the treatment of employees by the business and by the owners, the practices of the human resources management, and generally by what is considered as the organizational behavior, and in turn it also shapes and reinforces the organizational behavior.

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